News

25 August 2011

Press release

Supervision instruments

FINMA Circular on Credit Rating Agencies

The circular on "Credit rating agencies" published today by the Swiss Financial Market Supervisory Authority FINMA governs the recognition of institutions that can issue credit ratings for regulatory use. The fully revised circular redefines FINMA's requirements on credit rating agencies for its various supervisory areas and standardises the conditions for recognition. It will enter into force on 1 January 2012.

Besides governing the regulatory use of ratings by banks and securities dealers, particularly when calculating required equity capital, the circular on "Credit rating agencies" also redefines their use by insurance companies (e.g. investment requirements for tied assets) and by collective investment funds (investment techniques and derivatives). Other changes to the former FINMA Circular 08/26 are based on current guidelines of international standard setters and also take into account the market environment in Switzerland. The requirements on credit rating agencies specified in the circular are intended to provide minimum qualitative rating standards. The circular will enter into force on 1 January 2012; transitional provisions will apply for insurance companies.

Changes to the consultation draft

Since the consultation resulted in an overall positive feedback, no major changes were made to the current circular. The provisions foreseen for using ratings for bank and securities dealers' liquidity risks to implement the rules made by the Basel Committee on Banking Supervision (Basel III – Liquidity Framework) are no longer included in this circular, but will rather be incorporated into the planned implementation of the Basel III standards.